D & O Diary has started keeping track of the Madoff-related insurance coverage litigation in a list which you can access here. The list begins with coverage here of a recent case filed in connection with a profit sharing plan where 100% of the assets ($12,000,000) was invested with Bernard L. Madoff Securities LLC. The DOL apparently launched an investigation, and by letter dated June 30, 2009, demanded that the company "restore losses" to the plan. The plan sponsor filed a claim with its "Employee Benefits Plan Administrative Liability" insurer in connection with the plan losses and the DOL’s actions, but the carrier denied coverage. The lawsuit is being filed in connection with the denial of coverage.
The Complaint filed by the plan sponsor against the insurer provides an indication as to the allegations being made by the DOL in requiring the plan sponsor to restore losses. According to the Complaint, the DOL is claiming "errors" on the part of fiduciaries:
- In failing to obtain a signed statement from Madoff acknowledging he was a fiduciary and registered as an investment advisor under The Investment Advisors Act of 1940.
- In failing to provide the DOL with copies of quarterly performance reports, written quarterly investment reviews, information on costs associated with the Plan, and an Investment Policy Statement.
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